This chapter looks at the revolution that technological advances in communication technologies has created for electronic business-to-business commerce (B2B). It is most important to understand how these new ways of conducting business necessitate changes in business processing of events as the nature of the events have changes (in some cases completely bypassing the need for human interactions). These business process changes necessarily create needs for new accounting of these processes and for new controls to placed on these processes.
E-business connections:
Back Office: internal processes (distribution, manufacturing, and accounting)-
Front Office: external processes (connections to customers and suppliers)
Modes of Processing Business Events:
Periodic: It is the processing mode in which a delay exists between the various data processing steps. The periodic mode is heavily dependent on the use of batch processing, and the two terms are often used interchangeably. Almost all manual systems use this mode
Use of Online Transaction Entry (OLTE) helps in reducing the redundancies that pure periodic mode processing.
The only time the master data is updated with periodic systems is right after the processing ahs been completed.
Periodic is much cheaper, less complex, can implement less controls.
Batch: is the aggregation of several business events over some period of time with the subsequent processing of these data as a group by the information system. Batch process sytems typically require 4 basic subprocesses to be completed before an event is converted into information reports that can be used by decision makers (Business event occurs, record business event data, update master data, nad generate outputs)
Immediate mode: is the data processing mode in which little or no delay occurs between any two data processing steps.
An example of this would be Online Transaction Processing (OLTP), a real-time system that performs all or part of the processing activities at the data entry terminal location (i.e. ATMs, and computerized reservation systems).
Methods for capturing e-business events:
Automated Manual Systems (4 steps): Business event occurs; Record business event data; Update master data; Generate outputs. Uses a periodic mode for processing in which the only time the master data are up to date is right after the processing has been completed.
Online Transaction Entry (OLTE): use of data entry devices allows business event data to be entered directly into the information system at the time and place that the business event occurs. Mimics the automated manual system, but the occurrence of the business event and recording of business event data are merged into a single step. Considered online because the data entry device (such as a scanner) is directly connected to the computer.
Online Real-Time (OLRT) (3 steps): gather business event data at the time of occurrence, update the master data essentially instantaneously, and provide the results arising from the business event within a very short amount of time. Represents immediate mode (real-time) in which little or no delay occurs between any steps in the processing. Most systems rely on a mix of periodic (OLTE) and immediate (OLRT) processing
Online Transaction Processing (OLTP): is a real-time system that performs all or part of the processing activities at the data entry terminal location. Delays caused from electronic communications between the terminal and central computer are reduced or eliminated. Common applications are automatic teller machines (ATMs) and computerized reservation systems.
Methods for conducting E-Business:
E-mail is the electronic transmission of mon standardized messages between two individuals who are linked via a communicaitons network.
Electronic Document Management: is the capturing, storage, management, and control of electronic document images for the purpose of supporting management decision making and facilitating business event data processing.
Electronic Data Interchange (EDI):is the computer to computer exchange of business data in structured formats that allow direct processing of those electronic documents by the receiving computer system.
Components of EDI: Application software- the originator prepares the electronic document (i.e. Purchase Order) and the destination organization processes the electronic document (i.e. Customer Order). Translation Software- the application created in component one must be "translated" using the standardized EDI format before sending to the receiver. Currently two translation standards exist: the American National Standards Institute (ANSI) X12 used in the United States and Canada; and EDI for Administration, Commerce, and Transport (EDIFACT) which is used for international receivers. Communications Network- the means by which the EDI document is transferred. There are several ways to transfer an EDI document between sender and receiver such as; copying the translation of the document onto a disk and sending it directly to the destination organization; establishing a direct computer to computer link between the origination computer and the destination computer; usage of EDI service bureaus; and the Internet. Value-Added Network (VAN) Service- acts as a EDI "postman." Instead of sending the EDI document to each individual organization, using a VAN service will allow the origination organization send the EDI to mailboxes for the destination organization to pick up.
Internet Commerce: is the computer to computer exchange of business event data in structured or semi structured formats via internet communication that allows the initiation and cosummation of business events.
Miscellaneous (but important) Concepts:
Assurance providers (who, why, how):To provide limited assurance to users of the vendor;s Web site that the site is in fact reliable and event data security is reasonable.
Value-Added Network Service:is a packet-switched network service that provides communications capabilitites for organizations not wishing to obtain their own packet-switched or dedicated communications links.
E-Business
This chapter looks at the revolution that technological advances in communication technologies has created for electronic business-to-business commerce (B2B). It is most important to understand how these new ways of conducting business necessitate changes in business processing of events as the nature of the events have changes (in some cases completely bypassing the need for human interactions). These business process changes necessarily create needs for new accounting of these processes and for new controls to placed on these processes.E-business connections:
Modes of Processing Business Events:
Methods for capturing e-business events:
Methods for conducting E-Business:
- E-mail is the electronic transmission of mon standardized messages between two individuals who are linked via a communicaitons network.
- Electronic Document Management: is the capturing, storage, management, and control of electronic document images for the purpose of supporting management decision making and facilitating business event data processing.
- Electronic Data Interchange (EDI):is the computer to computer exchange of business data in structured formats that allow direct processing of those electronic documents by the receiving computer system.
Components of EDI:Application software- the originator prepares the electronic document (i.e. Purchase Order) and the destination organization processes the electronic document (i.e. Customer Order).
Translation Software- the application created in component one must be "translated" using the standardized EDI format before sending to the receiver. Currently two translation standards exist: the American National Standards Institute (ANSI) X12 used in the United States and Canada; and EDI for Administration, Commerce, and Transport (EDIFACT) which is used for international receivers.
Communications Network- the means by which the EDI document is transferred. There are several ways to transfer an EDI document between sender and receiver such as; copying the translation of the document onto a disk and sending it directly to the destination organization; establishing a direct computer to computer link between the origination computer and the destination computer; usage of EDI service bureaus; and the Internet.
Value-Added Network (VAN) Service- acts as a EDI "postman." Instead of sending the EDI document to each individual organization, using a VAN service will allow the origination organization send the EDI to mailboxes for the destination organization to pick up.
Miscellaneous (but important) Concepts: